Mothercare rights issue takes effect

10th Oct 2014 13:39

Mothercare shares were in the red on Friday after the 79.9m new shares issued as part of its rights issue began trading.The funds raised by the 125p-a-share rights issue, which received overwhelming support from its investors at Thursday's extraordinary general meeting, will be used to enhance its online division, close a quarter of its stores and revamp the rest.The retail chain, which also owns the Early Learning Centre brand, has seen its share price slide more than 56% in the year-to-date as it struggles to do battle against its UK competitors and other online retailers.Speaking in its July interim management statement, chief executive officer Mark Newton-Jones said the group needed to "put in place the building blocks to strengthen the UK performance", but that he sees "a tremendous opportunity to take this business forward".The group, which issued two profit warnings within a three-month period, is planning to reduce its store numbers by 60 to 160 over a three-year period, moving away from the high street to out-of-town retail sites.Earlier this year, the group rejected two attempted by US-based Destination Maternity to takeover the company with a £266m offer.